Dr S Irudaya Rajan Dr K C Zachariah Centre for Development Studies, Thiruvananthapuram Kerala, India

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1 Impact of Oil Rich Gulf Cooperation Council Policies on Indian Emigration Dr S Irudaya Rajan Dr K C Zachariah Centre for Development Studies, Thiruvananthapuram Kerala, India Summary Human migration is one of the most challenging issues facing the world today. As per the latest estimates available from the Ministry of External Affairs, New Delhi, the approximate number of Indians settled throughout the world is around 6.8 millions, of which 45 percent live in the Gulf region in West Asia. West Asian labour migration is a temporary contract migration and 90% of them migrate alone leaving their families. In 2003, International Monetary Fund has published the list of 20 developing countries with the volume of remittances and remittances as percentage of GDP. India ranked as number one in terms of the volume of remittances with 18.3 billion US $ and contributed to 2.0 % of the gross domestic product. In this context, the proposed research proposal is expected to review the migration and labour policies of Oil Rich countries in Gulf (United Arab Emirates, Kingdom of Saudi Arabia, Oman, Kuwait, Bahrain, Qatar) and its impact on the economy and society of developing country such as India. The Gulf countries such as United Arab Emirates, Saudi Arabia, Kuwait and Oman have officially viewing that emigration levels are too high and they are following a policy to lower the emigration. The impact on poor countries can be varied from brain drain of skilled labour to reducing poverty. The proposal is likely to address the macro dimensions of the issue using the various published and unpublished data. INTRODUCTION Human migration is one of the most challenging issues facing the world today. Indian emigration has been taking place since centuries but never before in history India witnessed such massive movements of people from India to other parts of the world as in the 19 th and 20 th centuries. A crude estimate by a co-convenor of the first Global Convention of People of Indian Origin, held in New York in 1989, puts the figure as 20 millions (Jagat, 1994). The High Level Committee on the Indian Diaspora in its foreword writes in December 2001 `the population of Indian Diaspora is estimated to be around 20 millions. However, country wise estimates provided in the same report submitted to the Ministry of External Affairs (2001), New Delhi, puts the approximate number of Indians settled throughout the world in 133 countries is around 16.9 millions; of which 51 percent of them belong to people of Indian origin. There are about 10,000 Indians or more in 48 countries and more than half a million persons of Indian descent in 11 countries represent significant proportion. Among the emigrants of diverse nationalities, overseas Indians constitute a sizeable segment. In terms of sheer numbers, they make the third largest group, next one to the British and

2 Chinese (Bhat et.al, 2002). The non-resident Indians, as per the latest report, are estimated around 3.9 millions. Interestingly, around 3.3 million Indians (about 85%) live in six countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates) in the Middle East (Table 1 for details). LABOUR EMIGRATION Table 1: Estimated Indians in Gulf, 2001 Country Indian citizens Bahrain 130,000 Kuwait 295,000 Oman 312,000 Qatar 131,000 Saudi Arabia 1,500,000 United Arab Emirates 950,000 Source: Ministry of External Affairs, Migration of workers from India to other countries is not a new phenomenon. Government of India, Ministry of Labour, maintain records of individuals who obtain emigration clearance 1 to work in abroad. Earlier, the destination of Indians workers was mainly to the United States of America, United Kingdom, Canada and other developing countries. Indian migration to Gulf has a history of several centuries but it received a fillip only with the discovery of oil fields and the commencement of oil drilling on a commercial basis in this region. The oil price hike in October 1973 marked a major watershed in the migration process. The massive demand for labour was accounted for by the sudden growth of the construction industry as the Gulf countries, which became immensely wealthy overnight, embarked on a frenzy of building a new infrastructure of roads, ports and airports, as well as schools, colleges and administrative blocks, symbols of the new wealth. For the additional labour required, they turned to more distant, non-arab countries such as India. The number of workers emigrated from India as workers in the contractual employment in abroad over the last several years were presented in Table 2. The number is very small compared to the total emigrants reported earlier because many emigrants do not require emigration clearance from Government of India. As per the Emigration Act 1983, seventeen categories of persons have been exempted from emigration clearance and have been placed under `emigration clearance not required The initial flow of contractual labour from India started with a low profile with just 0.16 million in 1985 reached a peck with 0.44 million in 1993 and then a slow decline and currently on the increasing trend with 0.37 million in We can divide the migration outflows into four phases. The first phase covers the period between 1985 and 1991, which witnessed the annual volume of emigration ranging between 0.11 million to 0.20 million. The second phase is the first half of 1990s ( ) when the annual flow of labour was more than 0.40 million. The third phase started since 1998 when a heavy fall in emigration took place in the annual outflow of the labour. The last phase is the beginning of the 21 st century where the annual flow is on the increase and it reached close to 0.4 million in

3 Table 2: Trends in Workers Emigrated from India, Year In Million Year In Million Notes: 1. Figures given above do not include persons who run business in partnership with foreigners; those who emigrated on visit visa and stayed on for job and those skilled workers and professionals such as doctors and engineers who do not require emigration clearance. 2. Compiled from various annual reports of the Ministry of Labour, Government of India. Where do they migrate as labour from India? Our analysis indicates around 95 percent of labour outflows reach the following six destinations (Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Oman and Qatar) in the Middle East in 1988 continued till 2002 with 75%. Few more countries such as Singapore and Malaysia are also added in the recent list of labour migration from India. In 2002, 24,399 labourers from India were migrated to Singapore and another 10,512 to Malaysia. Trends in this aspect are presented in Table 3. In 1994, Saudi Arabia led with 65 per cent annual labour outflows from India followed by United Arab Emirates. Even in absolute numbers, except in 1999, Saudi Arabia attracted large number of Indian labourers. This is also true for Available labour outflows reveals that Gulf countries became an important destination for Indians. The recent United Nations publication (2002) reveals that most of the countries listed above in the Gulf region felt that the immigration levels are too high and they would like to follow the policy of lowering the migration flows in the future. Migrant stock to the total population in United Arab Emirates is 74 percent (United Nations 2002) and Indian accounts for 33 percent (Zachariah, Prakash and Irudaya Rajan, 2002). This is also true for Saudi Arabia where 39 percent of migrants are from India (details, see Zachariah, Prakash and Irudaya Rajan, 2002). The United Arab Emirates imposed stringent restrictions on migrant unskilled labourers since Saudi Arabia and Bahrain also imposed stringent measures on migrant labour since Table 3: Labour Outflows from India by destination Year Bahrain Kuwait Oman Saudi Arabia United Arab Emirates (UAE) Others Total ,219 9,653 18,696 85,289 34,029 9, , ,520 5,679 16,574 49,710 28,189 11, , ,782 1,077 34,267 79,473 11,962 6, , ,630 7,044 22, ,928 15,446 7, , ,458 19,782 40, ,180 60,493 13, , ,622 26,981 29, ,639 77,066 19, , ,806 24,324 25, ,875 75,762 20, , ,235 16,439 22, ,782 79,674 28, , ,647 14,580 30, , ,644 26, , ,944 13,170 29, , ,945 29, , ,997 22,462 20, , ,740 54, , ,905 19,149 16,101 27,160 79,269 42, , ,909 31,082 25,155 59,722 55,099 56, , ,382 39,751 30,985 78,048 53,673 59, , ,807 4,859 41,209 99,453 95, , ,663 Source: Compiled from various annual reports of the Ministry of Labour, Government of India. 3

4 Table 4: Workers granted emigration clearances by Major States, State Andhra Pradesh 35,578 30,284 38,278 18,983 29,999 37,331 38,417 Karnataka 34,380 33,496 40,396 5,287 10,927 10,095 14,061 Kerala 155, , ,102 60,445 69,630 61,548 81,950 Maharashtra 35,248 26,312 25,146 9,871 13,346 22,713 25,477 Punjab 14,212 11,852 12,414 15,167 10,025 12,422 19,638 Rajasthan 25,243 28,374 28,242 9,809 10,170 14,993 23,254 Tamil Nadu 70,313 65,737 63,672 47,402 63,878 61,649 79,165 Others 68,156 53,650 52,174 32,588 35,207 57,913 85,701 Total 438, , , , , , ,663 Source: Compiled from various annual reports of the Ministry of Labour, Government of India. State-wise break of the number of workers granted emigration clearance is available for the years between 1993 and 2002 (Table 4). There has been continuous decline in the emigration of workers of almost all states under study until 1999, then a slow increase. Among the workers, Kerala accounts for the largest number of workers, followed by Tamil Nadu and Andhra Pradesh. Some of the other states having sizeable number of total labour emigrants are Karnataka, Maharashtra, Punjab and Rajasthan. One of the reasons for the low labour migration in Kerala is that of persons holding Graduate degrees are exempted from emigration clearance. Southern states such as Kerala, Tamil Nadu and West Bengal led with highest number of graduates in the country. We have no data on the state level exemption of emigration clearances but at an all-india level, it has shown an increase during the last 10 years. Ministry of Labour has also published data on labour migration by category wise employment few years. The data are of questionable quality (See Table 5). However, surprisingly, 56% of emigrants left India on labour contract to work as labourer, helper, cook and housemaid or houseboy without any educational qualification or with few years of schooling. This is supported by an earlier study conducted in Kerala (Zachariah, Mathew and Irudaya Rajan, 2001a; 2001b). Using the proportion of migrants with secondary education or a degree as a measure of educational attainment, the out-migrants are better educated than emigrants and return emigrants. Even in a highly literate Kerala, about 60% of emigrants working in Gulf countries are less than secondary level of education. (Zachariah, Mathew and Irudaya Rajan, 2003) 4

5 Table 5: Emigration Clearances Granted by Type of Work, Category Carpenter 6,361 12,900 6,939 5, Cook 3,550 3,051 2,070 2, Driver 6,562 6,334 6,724 5, Electrician 3,494 3,689 4,496 2, Engineer Fixer/Fabricator 1,904 2,008 2,827 1, Foreman Paramedical staff 1, Labourer/Helper 91,196 40,657 58,779 45,028 17,345 Mason 8,550 8,731 8,913 6, Mechanic/AC also 3,562 4,476 3,263 2, Office Staff 3,916 2,211 1,385 1, Operator 1,309 1,855 1,342 1, Painter 2,273 2,501 1,867 1, Plumber 1,971 1,624 2,047 1, Tailor 5,115 4,361 3,722 3, Technician 3,539 1,450 3,389 2, Welder 1,497 1,222 3,272 1, Supervisor 1, , Surveyor Salesman 1,580 4,199 4,121 3, Housemaid/House-boy 891 2, ,400 1,938 Fitters 0 1, Agriculture Others 18,284 17,778 2,565 19,302 3,074 Total 169, , , ,316 24,266 Source: Compiled from various annual reports of the Ministry of Labour, Government of India. EMIGRATION IN OIL RICH COUNTRIES In this context, let us assess the Emigrant stock scenario in the Gulf countries in West Asia and their views and policies on immigration levels (Table 6). Out of six countries under our perview to assess the impact on rich country policies on poverty, two countries report their percent of emigrants to total population as above 70 and another two report between 40 to 60%. One-fourth of population in Oman and Saudi Arabia are emigrants. Four out of six countries felt that their immigration levels are too high and formulate policies to lower the levels. During our recent visit to the United Arab Emirates, they informed us about their proposal of Emiratisation and theory of demographic imbalance. Table 6: Migrant Stock in Gulf Countries in West Asia, 2002 Country Population Emigrants % of emigrants Immigration Levels (in million) (in million) to total population View Policy Bahrain Satisfactory No Intervention Kuwait Too High Lower Oman Too High Lower Qatar Satisfactory Maintain Saudi Arabia Too High Lower United Arab Emirates Too High Lower Gulf Source: United Nations

6 In a recently published paper by Tattolo, the author overviews the labour migration to the Gulf Co-operation Council (GCC) countries. Table 8 provides the percentage of nationals and expatriates in the GCC countries for the periods (Table 7). Over the past 25 years, except Kuwait, all other countries in the GCC region, the percentage of expatriates on the increase. As stated earlier, countries such as Kuwait, Qatar and United Arab Emirates, the percentages of expatriates to the total population are very high ranging from 63 to 80 percent. The predominance of expatriates (foreigners) is pronounced even in the labour force in the six countries listed above. In the United Arab Emirates, foreigners accounts for 90 percent of labour force, followed by 80 percent in Kuwait. (Table 8). Table 7: Percentage of nationals and expatriates in the population of GCC countries, Country 1975a 1980 a 1985 a 1995 a 2000b d BAHRAIN Nationals Expatriates Total ( 000s) KUWAIT Nationals c 37.0 Expatriates Total ( 000s) , , , ,360 OMAN Nationals Expatriates Total ( 000s) , , , ,420 QATAR Nationals Expatriates Total ( 000s) SAUDI ARABIA Nationals Expatriates Total ( 000s) 7, , , , , ,000 UAE Nationals Expatriates Total ( 000s) , , , ,000 All GCC countries Nationals Expatriates Total ( 000s) 9, , , , , Note: a Girgis, 2002 b ESCWA, 2001 (Data for 2000) c PACI, 2002 (Data for 2002) d Sources: for Bahrain, Oman, Qatar, Saudi Arabia and the UAE: The 2001 annual report by the GCC secretariat, released July 27, 2002 as well as The Economist Country Reports from mid-2002; for Saudi Arabia reports by different Saudi ministries were used as well; for Kuwait: Ministry of Planning data. Taken from Tattola,

7 Table 8: Percentage of nationals and expatriates in the labour force of GCC countries, Country 1975 a 1980 a 1985 a 1995 a 2000 a BAHRAIN Nationals b Expatriates Total ( 000s) KUWAIT Nationals c Expatriates Total ( 000s) , ,320.1 OMAN Nationals Expatriates Total ( 000s) QATAR Nationals b Expatriates Total ( 000s) SAUDI ARABIA Nationals Expatriates Total ( 000s) 1, , , , ,176.3 UAE Nationals Expatriates Total ( 000s) , ,355.7 All GCC countries Nationals Expatriates Total ( 000s) 2, , , , not available Sources : a Girgis, 2002; b The Economist, print edition, 2002 (latest statistics) c PACI, 2002 (Data for 2002) Taken from Tattola,

8 Table 9: Major expatriate communities in the GCC countries (Estimates for 2002, in,000) Bahrain Kuwait Oman Qatar Saudi Arabia UAE Total Indians ,400 1,000 3,200 Pakistanis , ,740 Egyptians , ,455 Yemenis 1, ,035 Bangladeshis Sri Lankans Filipinos Jordanians/ Palestinians Syrians Iranians Indonesians Sudanese Kuwaitis 120 Turks 100 Bidoons Total 280 1, ,000 2,488 Source: Various estimates. Note: Numbers of only major expatriate communities in each of the GCC countries are included in the table. Due to this exclusion, the figures in the columns do not add to the total shown. Taken from Tattola, As we can see from the Table 9, all the six oil rich countries, Indians rank as number one expatriate community in the region, followed by Pakistan. The remittances send by the contract labourers living in GCC countries to various states of India will produce lot of economic impact such as reducing unemployment in the sending destination, improved standard of living and consumption levels, reduced incidence of poverty, higher investment on education and health and so on. Let us look at the remittances patterns to different states of India. In our earlier study, we try to estimate the remittances send from the U.A.E to India and the issues connected with NRI investment. Currently, we do not have any estimate about the total remittances send by emigrant workers from U.A.E. To estimate the remittances, we have relied on the figures of U.A.E Exchange Centre, Abudhabi which is the largest one dealing with currency exchanges in U.A.E. Though there are 108 companies in U.A.E engaged in exchanging and sending remittances, the share of U.A.E Exchange Centre is about 55 percent of the total volume of business. Assuming 55 percent as the share of U.A.E Exchange Centre we have estimated the total remittances sent from U.A.E to India. Accordingly the total remittances sent from U.A.E to India increased from Rs.5728 Crore in 1998 to Rs Crore in 2000 (Table 10). Thus the total remittances send from U.A.E to India during 2000 was about 7200 Crores. The 8

9 remittance includes workers remittances plus the remittances of Indian firms and business establishments in U.A.E. Table 10: Total Remittances from U.A.E to India Year Total Remittances sent to India (Rs in Crore) Remittances sent to Kerala (Rs in Crore) Note: (1) Total Remittances to India is estimated on the assumption that the share of U.A.E Exchange centre in total exchange business is 55 percent. (2) The share of Kerala is assumed at 55 percent of the total remittances to India. Table 11: Amount of Remittances to States of India and Union Territories Through U.A.E Exchange Centre for the Month of May 2001 State / Union Territory May 2001 (Rs in Thousand) Percent Andamans Andhra Pradesh Arunachal Pradesh Assam Bihar Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Meghalaya Nagaland New Delhi Orissa Pondicherry Punjab Rajasthan Tamil Nadu Tripura Uttar Pradesh West Bengal Source: Zachariah, Prakash and Irudaya Rajan In order to estimate the flow of remittances from U.A.E to the various states in India, we have relied on the remittance figures of U.A.E. Exchange Centre for the month of May It may be noted that this amount includes only the remittances of U.A.E 9

10 Exchange Centre, the largest firm dealing in currency exchanges. It was found that 57% of the remittances was sent to Kerala (Table 11). The other states which received substantial amount of remittances from UAE are Tamil Nadu, Punjab, Maharashtra, Andhra Pradesh and Karnataka. To understand the remittances flows to various parts of Kerala, we have provided a district wise break up of the remittances sent through UAE exchange centre for the month of May Of the districts, Thiruvananthapuram district received 16 percent of the total remittances sent to Kerala (Table 12). Thrissur district received 15 percent and Malappuram 14 percent. Kannur accounted for 10 percent of the remittances. The districts received small amounts of remittances are Idukki and Wayanad. Table 11: Amount of Remittances to Districts of Kerala through U.A.E Exchange Centre for the Month May 2001 District May 2001(Rs in thousand) Percent Alappuzha Kozhikode Ernakulam Idukki Kannur Kollam Kasargod Kottayam Malappuram Palakkad Pathanamthitta Trichur Thiruvananthapuram Mahe (Union Territroy) Wayand Total Source: Head Office of the U.A.E Exchange Centre, Abudhabi. OBJECTIVES AND TESTABLE HYPOTHESIS (a) Review the existing labor, migration and monetary policy of six countries in the Gulf (b) Estimate the remittances from each country to India (c) Estimate the labour migration from India by major states (d) Assess the macro impact on emigration and remittances to India in terms of poverty reduction, improved standard of living, reduction in unemployment, and investment in human resources such as education and health. (e) Impact of emigration and remittances on people s lives in India. 10

11 SIGNIFICANCE OF THE RESEARCH In our earlier migration study conducted in Kerala, we have concluded: Migration has provided the single most dynamic factor in the otherwise dismal scenario of Kerala in the last quarter of the twentieth century. It is one of the positive outcomes of the Kerala Model of Development. Kerala is approaching the end of the millennium with a little cheer in many of its homes, thanks to migration and the economic returns that it brings. In Kerala, migration must have contributed more to poverty alleviation than any other factor including agrarian reforms, trade union activities and social welfare legislation" (Zachariah, Mathew and Irudaya Rajan, 2003) We would like to test it for India as a whole, as India is no one country among developing countries in terms of remittances. As long as, most of the labourers are in the Gulf, their policies are important in the migration process. DATA DESCRIPTION We will compile various existing data sets in the six Gulf countries on remittances and other related issues. At national level, we have several data on poverty, standard living, unemployment, consumer expenditure available from the National Sample Survey, National Family Health Survey will be utilized to assess the macro impact of remittances on India s economy and other balance of payments. Bibliography AA.VV., Les migrations dans le monde arabe, Beauge Gilbert, Buttner Friedmann (sous la direction de), CNRS éditions, Paris, Aly Hassan Y., Shields Michael P., A model of temporary migration: the Egyptian case, International Migration, vol.xxxiv, n.3, Bilsborrow, RE; Graeme Hugo; Oberai A S and Hania Zlotnik (1997), International Migration Statistics, International Labour Office, Geneva. Birks J.S., Seccombe I.J., Sinclair C.A., Labour Migration in the Arab Gulf States: patterns, trends and prospects, International Migration, vol.xxvi, n.3, Birks J.S., Seccombe I.J., Sinclair C.A., Migrant workers in the Arab Gulf: the impact of declining oil revenues, International Migration Review, vol.xx, n.4, Bohning; WR(1996), Employing Foreign Workers, International Labour Office, Geneva. Donald.F.Heisel (1982), Theories of International Migration in International Migration in the Arab World, vol.ii, United Nations Economic Commission for Western Asia. 11

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